Can You Still Afford to Buy A House Near the Subway?

The winter of 2014 may have marked an end to an era for many first time buyers and savvy investors looking to purchase a Toronto house or investment property.  Slowly but surely, neighbourhoods along the Bloor/Danforth line that were once affordable have been disappearing.  Now, it looks like the last two neighbourhoods of house affordability near the subway are turning over. Up until this year, one neighbourhood in the east and one in the west were still in their early stages of emerging as a revitalized neighbourhood for many buyers who wanted to be near the Bloor subway. The Danforth Village and Wallace-Emerson were the last two areas to go. In the west,  Wallace-Emerson has become a place of bidding wars and steep competition. The local indie businesses have arrived here from Body Harmonics Pilates to The Hub, the new indie coffee shop. Nowadays, some are even throwing around the terms "new Queen West" to describe the influx of hip stores and trendy shops arriving. 

In the east, the Danforth Village from Main Station to Victoria Park has been a growing destination for first time buyers, and investors that continue to roll along the Danforth line to the end of the old Toronto city limits. Though it does not quite have the hip factor as far east as Vic Park yet, this is also a place of competitive bidding wars, strollers, and great transit. Though there are a few spots where a first-time homebuyer can pick something up for under $500K at the moment, even affordable houses in this neighbourhood are becoming as rare as spotting a sasquatch in a tutu downtown.

Of course, buyers who have bought here will be thrilled that they have invested early enough to benefit from the rapid price appreciations of these emerging neighbourhoods on the Bloor-Danforth line. Many blossoming investors and first time buyers may feel a little blue at this news. There may be a sense that they have missed out on a time when buying a house near quick and easy transit was possible. 

Before you release those bitter tears from your sad eyes, and  run off to buy a suburban house in Milton, let me tell you that there is hope. The end, for you, is not nye. You can buy a house or investment property in an emerging neighbourhood near good transit in Toronto in the years to come.  The only problem - it's not built yet.

So, perk up first-time buyers and investors because the Eglinton-Crossway is coming! Maybe you do not spend much time up on Eglinton, but it doesn't matter because this transit plan will transform many neighbourhoods and create quick access to downtown. 

How fast will these trains move? Well,  the expert estimations of Metrolinx have a trip from the far west destination of Mount Dennis to the Kennedy station in Scarborough at 40 mins. Not bad at all. That's 60% faster than the current buses plus there is a good portion of this LRT that will be underground from Keele to Laird and a dedicated lane above ground in all other portions of this line, making it traffic proof. For more detail, check out this map.

Who's going to benefit? In the west of Toronto, you will see neighbourhoods like Mount Dennis, Caledonia, Keelesdale and Weston become much more connected to the downtown, turning them from inaccessible outposts to easy transit hubs. And right now, these neighbourhoods carry some of the most inexpensive real estate in the city. Places like Weston even have some incredible Victorian and heritage homes. Again, you don't have the yoga shops and espresso bars yet, but this is why this place is still inexpensive. Eglinton, from east to west, will see an improvement on its commercial strip, though some businesses may suffer during construction.

The big winner in the central location will be Oakwood. Still undervalued, in my opinion, and soon to be a great access point to the rest of the city.  It will make its northern frontiers much more appealing, in addition to being a spillover neighbourhood from the Wychwood neighbourhood to the south.

 In the east, parts of Scarborough will feel significant improvements, especially in neighbourhoods like Clairlea-Birchmount that will also receive the overflow from the Danforth Village once those homes become too expensive for first time buyers and investors on a budget. 

Maybe you're thinking: Houses are too much work. Condos are where it's at.  If that's the case, this transit line should interest you as well. In many of the neighbourhoods mentioned in the east and west section of the line, there is little or no condo development, and believe me, it will be coming, and those first roundsof condos will be priced lower than the ones to follow.  

Service on the Eglinton Crossway is scheduled to start rolling in 2020.  So, you may need to wait to have a good return on this investment. Still, this is the largest transit expansion in Toronto's history that literally crosses the entire city. There are real opportunities to be had. So, make sure you don't miss the discount house prices near good transit. It won't last forever.

Follow the Dogs - A Buyer's Guide to Toronto Real Estate

I just got a puppy. It's a rescue puppy consisting of a mix of many breeds, a sweet girl who I am crazy in love with already.  When I went walking in my neighbourhood, I could not believe the number of people who I had never even seen before that would stop and chat with me. My new pup already loves just about any human, though she's fairly indifferent so far to other dogs.

But today's rant is not about the glory of owning a new canine, but how dogs affect the real estate market.  I know, this is the part where you roll your eyes and think "This is a bit of a stretch...." But bear with me. It really isn't.

Even if you don't like dogs or want one, the truth is, in a city like Toronto, you can spot an established or emerging neighbourhood by the  amenities that cater to dogs. Take, for example, a doggie day care or a doggie spa. Most of these indie businesses cater to neighbourhoods on the rise or ones that have arrived. It's doesn't mean that the more dog owners you have, the better your neighbourhood will be. That's not the case. It does, however, speak to the kinds of things that people want in their neighbourhood: Namely, the independent, quirky businesses that makes their area distinct and self-sufficient.  Take Tailwaggers in the Junction. It's part of many of the other indie businesses that have opened up there like The Beet, the Indie Ale House or Locomotive. All of these businesses are key to making the Junction an attractive place to live with a walkable main street. It's the kind of place with an impressive walk score, and makes life outside of the house or condo much better. It's easier to pick up fresh bread, an espresso, or drop one's dog off for a little snippety snip of the nails and the fur. Even better, you don't have to drive or take public transit to the businesses you need. 

Then there are the dog parks. I know this is a place of war in many neighbourhoods. Those who use the parks like to have it nearby for their dogs. Those who live by the park have to listen to dogs all day. I don't have a solution, but I can say that neighbourhoods that have dog parks often have a strong community. People chat with each other and the dark park becomes a community hub. People looking to buy here, even if they don't have a dog, feel good about it. It shows that there is some interaction. Plus, strong communities push for things like a business improvement association, better attention to the parks, farmer's markets, and well-used community centres.

Even if you live in a place with several low to high rise condo developments, you should still watch for the dogs. Many quality condos with no infrastructure or businesses previously in the neighbourhood, will put in designate parks dedicated to humans and their dogs. Of course, the best example of this recently is Cork Town with the incredibly awesome Corktown Common.

These days, no one wants to suffer the soul-crushing drive of the commute. The desire is not to live outside the city in a bigger house within driving distance to box stores you can find anywhere in North America. The push inside the boundaries of Toronto is to live local. People would rather walk to do their shopping that drive to it. This is why many of us love to live somewhere distinct whether it's the Danforth Village, Roncesvalles, Leslieville, Old Mill, Liberty Village, Alderwood, the Junction Triangle, Weston or Oakwood.  All of these neighbourhood have their own flavour, but are not so tightly defined that they are rigid or inaccessible to someone who is new.

At the end of the day, if you are still looking for this kind of neighbourhood in which to live, then follow the dogs. Even if you find dogs noisy, smelly and annoying, they still are good for your hood. Look for doggies’ stores and the dog parks when you are looking for real estate, and you may end up with a great investment and a pleasant place to live.

Is This The Year of The Nosedive For The Condo Market?

This was supposed to be the year. The nosedive year. The condo apocalypse. The crash all the naysayers have been dying for. But why 2014? Well this is the year that we will have the most new condos coming to the housing market, more than we ever had before in the city of Toronto. And that doesn't even count the resale condos. With this incredible number of condo units  hitting the market, this is the year where we are supposed to witness a flooding of the market with new condos that will throw off the balance between buyers and sellers, sending prices on a downward spiral. "Yay!" you would cheer if you you've been waiting for years for this event so you can swoop in and buy a cheap condo after the smoke has cleared. "Oh God, no!" you may blurt out if you are a recent buyer or soon-to-be seller. Your timing could not be worse.

But the truth is, it's likely not happening. Though three quarters of the year lies ahead of us and anything can happen, I'm not seeing a crash building up. In fact, I'm seeing something fairly balanced taking hold.

So what happened? Why no crash? Well, here are my thoughts on the crashless Toronto condo market of 2014, and why it's not taking place:

1.  The Housing Market is Nuts. I've said it before and I'll say it again. There is a limited supply of houses in this city. It is like the housing market and the condo market are not related at all, even though they are in the same city. Concerns over oversupply are big on the condo side of the properties for sale in Toronto with very few bidding wars. On the freehold/house side of things, we see limited supply of houses for sale and a lot of bidding wars for the ones that are. Though these two Toronto property markets have been functioning differently, one still does affect the other. I'm witnessing many exhausted or priced-out house buyers beginning to turn their attention to buying a condo, and in turn, adding more buyers to the condo market. In this market, one can more easily find something in the price range and not have to compete nearly as much.

2. The Condo Market Has Been Tame For Many Years.The key to the past few years was to buy or sell a condo in the right building in the right neighbourhood. Some condos have slipped in value over the past three years, some have risen in value, and some have stayed the same. My point: Prices have not been rising uncontrollably in the condo sector. In fact, it's been relatively flat.  If there is a condo bubble, the air has been let out of the bubble just a little bit already.

3. Interest Rates Are Low. And by low, I mean low. Nothing gets buyers out more than a low interest rate, especially when they are seeing 5 year fixed rates just below 3%. Rates are about as good as they get right now making it a pretty good time to buy from a mortgage point of view.

4. Most Condo Sellers are Not Desperate. We are not seeing a lot of distressed sales where condo owners are forced to sell because of their financing. Instead, we see investors holding on to their condos and renting them out. Since rents are pretty good in this city and condos take up a lot of the rental demand , some investors are holding on to their investments.

5. Condo Appeal. Demographically, condos appeal to two big and bulging groups in this day and age. Namely, the downsizing baby boomers, who are selling their homes for smaller and easier living, and the echo generation, the boomers’ kids who often look to condos as their first buy and a way to build equity. Of course, there are others. Most importantly, those buyers who just want to live close to the neighbourhoods they love in a downtown environment or an established neighbourhood without the hassle of a yard or fixing up a house. They want to be able to lock and leave when they go on vacation.

So, for all of those waiting for the crash so they can swoop in and buy up condos, sadly I don't think 2014 is your year. I cannot say what the future holds in the years to come, but for now the condo forecast looks calm and steady.

First-Time Buyer Blues: Don't Be Glum. Be Smart!

I conducted an open house this weekend for a comfy three bedroom house in Toronto that is priced under $500,000 with no parking. It was a cute place, in a part of the city that is improving. Not a bad area, but not a well-serviced one yet. Because I was under that magical $500K mark, there were many, many first-time buyers lining up to see the house. It was packed.

The thing is, I have never seen such a sad bunch of dejected buyers for quite some time. They were zombies,  marching through one open house after another with a visible sense of hopelessness. They have become aware of how competitive it is to buy a Toronto house in the starter home range so far in 2014. Bidding wars are expected.

Like a therapist, I listened to their tales of woe. Many of them have shared experience, and have drifted down the same path. They live downtown or in a nice Toronto neighbhourood in a pleasant rental unit. They thought: "Hey, how about I buy a house instead of renting an apartment?" I think it's a good idea. Why not build some equity to pay down your own mortgage instead of paying down your landlord's mortgage?  The thing is, they often rent in very central neighbourhoods like downtown, Trinity-Bellwood or Little Italy. At first, when they begin their house search, they check out house prices in the neighbourhood they live and realize it's not really affordable. Often, they then seek out an advanced emerging neighbourhood like the Junction or Leslieville. Yes, it's a little less central, but they are groovy hoods that are clearly on the upswing, already stocked with the obligatory hip coffee shops, Toronto Life-featured restaurants and all the yoga you can stretch out of your body. Some first-time buyers, who can afford certain emerging neighbourhoods, will look to the Danforth Village, and the Junction Triangle - but even these hoods have become highly competitive. If you're looking to buy a house under $500K, you may need to revisit your approach.

With all that said, it is easy to see why the first-time buyers become down. They are used to renting in a great neighbhourhood where they can spill out of their home and have a pleasant Spring walk to their local butcher or their favourite vegan bakery. The truth is, if you are looking for a house for under $500K, that can be tough, if not impossible. So, they wait for the market to change. The truth is, I don't believe any of the neighbourhoods listed above are going to become affordable any time soon. Even if we have a slow down in the housing market, there is still a shortage of houses in the city. Because of the province’s Places To Grow policies, all new construction is overwhelming high density. No more new houses are being built.

So, if you have a budget of under $500K and you cannot sink yourself  into bidding wars, you need to have a plan, and a little vision.  Here are some tips I think may get you to where you want to be:

1. Forget the House. Maybe you never lived in a condo before. Maybe the thought of them makes your skin crawl, but the truth is, you can find a great condo in a central area for a budget under $500K. Maybe you hate high-rises? No problem. Low rises and condo town homes are great investments. You can find them all over the city in your price range. That way, you can have a neighbourhood  a short walk to the nearest subway. You can linger at the espresso bar down the street before work or hit up the gym on your return.  And if you need a little outdoor space, you pick one with a rooftop deck and a bbq. Easy Peasy.

2. Save or Make More Money. This is a risky option. In the past five years, any one saving money has probably lost out. During that five years, the amount put aside likely wouldn't be enough to cover a home's price appreciation during that same time. Houses, in my estimation, will continue to rise in value. Still, if you can find a way to increase the amount you can qualify for, it will lead to more options. Also, if you have a larger down payment, you can afford a higher price point.  Maybe you are on the verge of a giant promotion or you have some family money coming your way. That may change your options. 

3. Pick An Emerging Neighbourhood That's Just Starting to Turn Around. So maybe as a first time buyer with a budget of $500K you want a house, and and condo won't do. You have to have a yard, and you just don't want to pay maintenance fees. Fair enough. Then you need to be a bit of a visionary here.   Forget about the all-star neighbourhoods. 10 years ago, Leslieville was the dumpy nowhere land between Riverdale and the Beach. Tumbleweeds would roll Queen East at night because there was nothing going on and no one was around.  You need to pick the next Leslieville.  In the east, there are still a few opportunities in the Danforth Village, though I suspect those days are numbered. You need to look to the neighbourhoods next to the ones exploding in price. In the east, you may want to consider Scarborough. It's one of the most undervalued parts of the city. In the west, you may want to try north of St. Clair in the Caledonia, Fairbanks, Keelesdale, Earlscourt and Corso Italia neighbourhoods. Sure the hip factor is not there yet, but it's coming. If you want the lower price, you have to get there before things change. For even lower prices, there is Mount Dennis and Weston. Yes, Weston is further away and hard to get to, but there is a GO station straight to downtown soon and I believe there is even a subway link in the works for Weston to the new Eglinton station.  These neighbourhoods can be the Riverdale and Roncesvalles of tomorrow. Get in now.

So first time buyers with a  budget under $500K, don't be so glum if you want to buy a house. You just need to tweak your dreams a little. If you just can't leave downtown, then get a condo. If you just have to have a house, then you need to go a little further afield. I know it will feel strange living in an area you may have never even visited. I've done it in Leslieville 2004! In time, though, you can make that area your home. Hopefully, with the other first-time buyers moving out there, the restaurants, the daycare, the cafe with the great patio will be right behind you.